Retail liquor outlets demand drinking spaces on premises

BENGALURU: If the government grants permission to retail liquor outlets to run permit rooms on their premises, people could enjoy a sip right there. A permit room is a small space within the premises of a shop where liquor can be served to customers, a practice already prevalent in Telangana and Andhra Pradesh.

This demand from liquor traders is largely a response to two proposals in this year’s state budget. While the budget proposed to remove the 5.5% Value Added Tax on beer and Indian Made Liquor (IML) sold at bars and restaurants, it simultaneously proposed a 16% hike in additional excise duty on alcohol sold at retail outlets from April 1.

While customers of pubs have reason to cheer the removal of VAT, liquor storeowners fear the hike in duty will increase their losses. “We’re seeking permission for a 10ft x 10ft space, exclusive of the shop. Karnataka should take a cue from Telangana and Andhra Pradesh,” said G Honnagiri Gowda, president, Karnataka Wine Merchants’ Association (KWMA).

However, food will not be served in these rooms. “The government must now create a level playing field for wine shops and pubs,” Gowda said.

“We’ve given a representation to the government and will write to the commissioner too,” said M Karunakar Hegade, general secretary, KWMA.

He said the hike in excise duty, coupled with the exorbitant licence fee, would turn the retail trade into an unviable proposition. “The fee is fixed on the basis of population, but retailers operating within Bruhat Bengaluru Mahanagara Palike limits have to pay Rs 6.9 lakh annually,” Hegade said.

Around 2,500 retail stores of the total 9,700 in the state are facing closure with the Supreme Court’s order prohibiting sale of liquor within a radius of 500m along highways coming into effect from April 1. A decline in consumption of hard liquor and beer has only added to the woes of these storeowners. Only 520 lakh cases of IML were sold in 2016-17 financial year (till March 20) against 570 lakh cases the previous fiscal year. The corresponding figures for beer are 234 lakh cases and 260 lakh cases respectively.

Liquor manufacturers too are worried by the dip. “The government must consider their demand in view of the challenges the trade is currently facing,” said Rakshit N Jagadale, executive director, Amrut Distillers.

Experts said these concerns need to be addressed if the government wants the excise department to meet its revenue target. While the department is likely to collect Rs 16,000 crore in the current fiscal year, the target for the upcoming year is Rs 18,050 crore.

Excise commissioner Manjunath Naik said the retailers had not made a formal representation. “It is a policy issue which will be decided by the government,” said Naik.

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